What are the upper and lower bounds for these projections

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Question - You are considering a new product launch. The project will cost $2,100,000, have a four-year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 230 units per year; price per unit will be $18,700, variable cost per unit will be $12,500, and fixed costs will be $620,000 per year. The required return on the project is 10 percent, and the relevant tax rate is 21 percent.

Required - Based on your experience, you think the unit sales, variable cost, and fixed cost projections given here are probably accurate to within ±10 percent. What are the upper and lower bounds for these projections? What is the base-case NPV? What are the best-case and worst-case scenarios?

Reference no: EM133048335

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